Tax Credits Bill

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Mr. Flight: I want to raise with the Minister a point of principle that was raised with me by the Child Poverty Action Group. Would it be either necessary or more appropriate for child tax credit to be paid on a pro rata basis where parents share responsibility for children? Even where the balance is not equal, both parents have considerable responsibilities. The consultation document assumes that there will be a main carer. Where responsibility is shared, only one parent will count and, if the parents cannot agree who that is, the Inland Revenue will make a judgment based on whether the child normally lives with one parent. It is unclear who receives the child benefits.

I do not know whether this is correct, but the Child Poverty Action Group told me that the restriction to one parent may arguably be in breach of the European convention on human rights and our Human Rights Act 1998. Treating the child as the sole responsibility of one parent to the exclusion of the other could be judged discriminatory unless there is a clear argument that the discrimination is objective. The Government appear to have considered that, given the reference in the consultation document, but I would appreciate an explanation of policy and whether it is likely to be reviewed.

Dawn Primarolo: We considered whether the tax credit payment should be split. When working out the proposals for the Bill, we examined where practice was working clearly and parents were used to working with a particular system. I am uncomfortable about what

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point we as legislators enter family arrangements to say what should happen, because that should be for the family to settle themselves.

In the vast majority of cases—someone is bound to describe different family circumstances—only one family could have the main responsibility. The award is then calculated on the family's circumstances and income and there is no provision for it to be split, because the principle behind the Bill is that it is conceivable that a family may receive less if we cannot determine the main carer. The family unit must decide, if, for example, the parents are separated. That applies now to child benefit, which is paid to the parent who has the main care responsibility; the parents must determine which of them has that responsibility. The same arrangements will apply to the new tax credits.

If the hon. Gentleman thought that clause 7 options (a) to (e) were complicated, I hesitate to think how complicated it would be if we tried to determine the arrangements for households with combinations of payments. We gave the matter careful thought, listened to what CPAG and others had to say, and decided that the proposal was too complicated and would not apply in the vast majority of cases anyway. Hon. Gentlemen may ask what happens if the matter cannot be settled. In such circumstances, the Inland Revenue would consider the facts of the case as it does now and determine who had the main responsibility. If that was challenged it could be settled at an independent tribunal.

When there is a family break-up there is often a great deal of contention and points of dispute become magnified. We want to ensure that the Bill does not inadvertently provide another point of contention because it would become a matter not only of whether the payment should be split, but by how much—would it be a third, two thirds, a tenth, 2s 6d and so on? It would become a nightmare. Nevertheless, this is an important point. As we learn and understand more about how households arrange their income, we will be seen to have taken the right decision. I hope that that deals with the hon.

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Gentleman's point. As I said, we considered the proposal and its implications very carefully.

Question put and agreed to.

Clause 8 ordered to stand part of the Bill.

Clause 9

Maximum rate

Mr. Webb: I beg to move amendment No. 50, in page 6, line 32, at end insert


    (c) an element in respect of any second adult in the benefit unit'.

The Chairman: With this we may take amendment No. 51, in clause 24, page 16, line 30, at end insert

    'except where an employee requests payment into an account notified to the Board or via a Post Office, in which case the employee shall be entitled to receive payment in this manner'.

Mr. Webb: Clause 9 refers to the maximum rate of child tax credit payable. At present it can increase in respect of an amount per family and an amount per child. Amendment No. 50 proposes a further element, which would apply to families in which there was a second adult in the benefit unit; essentially, that means couples, whether married or cohabiting. Conservative amendment No. 51 would have a broadly similar effect and raises the same issues.

The benefit system acknowledges second adults; income support and housing benefit recognise that if there is another mouth to feed in the household, it should be reflected in the amount of money to which people are entitled. However, the tax credit system and the working families tax credit have never operated on that basis. There is a danger of inequity between a lone-parent family and a two-parent family on the same given income, because the two-parent family—

It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at half-past Two o'clock.

The following Members attended the Committee:
Hood, Mr. Jimmy (Chairman)
Boateng, Mr.
Buck, Ms
Casale, Roger
Clappison, Mr.
Cruddas, Jon
Flight, Mr.
Hoban, Mr.
Luff, Mr.
Mole, Mr.
Pond, Mr.
Primarolo, Dawn
Sheridan, Jim
Southworth, Helen
Sutcliffe, Mr.
Swire, Mr.
Webb, Mr.
Wright, Mr. Anthony D.

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